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Hulu Service Said in Talks to Sell Stake to Time Warner

Deal Could Value Hulu at More Than $5 Billion

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Hulu, the streaming service owned by three media companies, is in talks to add Time Warner as a fourth investor, according to people with knowledge of the situation.

A deal could value Hulu at more than $5 billion, according to the people, who asked not to be identified discussing a private matter. The talks aren't advanced, and there's no guarantee of an agreement, one of the people said.

Time Warner's stake could equal those of Hulu's current investors, 21st Century Fox, Walt Disney and Comcast's NBC Universal, the people said. The service has taken on added significance for its owners as they put more movies and TV shows online. The rise of competing services like Netflix has coincided with a decline in live TV.

"With Time Warner in the mix, it is hard to see a scenario where Hulu doesn't become a more meaningful competitor to Netflix," said Paul Sweeney, an analyst with Bloomberg Intelligence.

Time Warner could decide, on the other hand, to stay out of Hulu and concentrate on building its streaming services around HBO and potentially other networks.

Hulu's owners introduced the service in 2007 to generate additional sales for their TV shows online and appeal to younger audiences. They explored selling the company two times, ultimately deciding to hold onto it and invest $750 million to pay for more content.

Hulu has invested some of that money in original programming, and also licensed shows like "Seinfeld," "South Park" and "Empire" in deals over the past year. Time Warner's Turner Broadcasting agreed to license shows "Aqua Teen Hunger Force" and "The Last Ship" to Hulu in April.

Hulu said in April that the service has more then 9 million paying customers. Rival Netflix reported 69.2 million worldwide at the end of the third quarter, and 43.2 million in the U.S.

"Our commitment to Hulu is self-evident," Fox Chief Executive Officer James Murdoch said on a call with analysts last week. "We've invested a lot in it. We continue to license to it where it makes the most sense for our creative partners and us to do so."